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Bristol-Myers Squibb Agrees to Pay More Than $9 Million to Massachusetts Medicaid Program to Settle Allegations of Improper Marketing and Business Practices

BOSTON July 15, 2008 Attorney General Martha Coakley’s Office has entered into an agreement with international pharmaceutical manufacturer Bristol-Myers Squibb Company (BMS) to settle a variety of allegations of improper sales, marketing and price reporting practices.  Under the terms of the settlement, BMS will pay $9,214,659.43 to the Massachusetts Medicaid Program. 

“The Massachusetts Medicaid program expects health care providers, both large and small, to operate with honesty and integrity,” Attorney General Martha Coakley said.  “Our office will continue to work in collaboration with our partners in state and federal law enforcement to identify and eliminate fraudulent marketing and pricing schemes that drain taxpayer dollars from an already overburdened health care system.” 

The agreement is the result of a four-part, seven-year investigation that began in 2001, and was coordinated with the federal government and other state Attorneys General involving BMS and Apothecon, Inc., a former BMS subsidiary that produced and marketed generic pharmaceutical products.  The claims addressed in the investigation arose from nine separate whistle-blower lawsuits filed in various jurisdictions around the country, and a voluntary disclosure by BMS of potential violations of state and federal anti-kickback laws.  The joint investigation was conducted by the U.S. Department of Justice, the U.S. Attorney’s Office for the District of Massachusetts, and a national Medicaid Fraud team which includes attorneys and investigators from Massachusetts, Ohio, New York, New Mexico, Vermont and Pennsylvania.   There were four distinct components of the investigation:

  • Price Reporting

BMS was alleged to have deliberately and falsely inflated its reported Average Wholesale Prices for sixteen Apothecon generic drugs and seven BMS infusion therapy products.  Government health insurance programs commonly rely on these reported prices in setting drug reimbursement amounts, and the improper overstatement of these prices causes overpayments by the Medicare and Medicaid programs.   

  • Kickbacks

Both BMS and Apothecon were investigated for failure to comply with the terms of federal and state anti-kickback statutes.  Apothecon was alleged to have paid improper inducements to pharmacies and wholesalers in order to increase the market share of its products to the disadvantage of its many generic competitors, and BMS was alleged to have engaged in similar conduct to promote sales of its innovator products over the therapeutic alternatives developed and marketed by its brand-name competitors.  In addition, in the course of implementing marketing initiatives, BMS offered substantial savings to pharmacies and wholesalers, purportedly as legitimate incentives to improve the formulary status of the entire Apothecon product line.  Government investigators charged, however, that these “discounts” were in fact improperly linked to purchases of a number of BMS’s blockbuster brand name drugs. 

  • Off-label marketing of Abilify

Abilify is BMS’s entry in the lucrative market for atypical anti-psychotic drugs, and was approved by the FDA in 2002 for the treatment of schizophrenia in adults and in 2004 for the treatment of adult bipolar disorder.  This phase of the investigation focused on allegations that BMS had instructed its sales staff to promote the prescribing of Abilify for pediatric uses and for the treatment of dementia when the drug had not received FDA approval for use by children or as a therapy for dementia. 

  • Serzone Rebate Violations

The settlement also resolves allegations that BMS sold its anti-depressant Serzone to California-based HMO Kaiser Permanente at a deep discount and concealed the sales data from the federal government, thereby improperly reducing the amount of Medicaid rebates the company paid to the states. 

The U.S. Department of Justice announced the federal component of this settlement in September 2007.  The total value of the combined federal and state settlements to the state Medicaid programs nationwide is approximately $389 million, with more than $9 million allocated to Massachusetts Medicaid.  In addition to the payments to the federal government and the states, BMS has agreed to the terms of a Corporate Integrity Agreement, which will include provisions to ensure that BMS discontinues the conduct that was the subject of the government’s investigation, and will require ongoing oversight by the federal government of the company’s marketing, sales and price reporting practices. 

The Massachusetts portion of the investigation was handled by Assistant Attorney General Robert Patten, with assistance from Data Analyst Anthony Megathlin, both of Attorney General Martha Coakley’s Medicaid Fraud Division.  The settlement was the result of negotiations jointly conducted by the Department of Justice, the United States Attorney’s Office for the District of Massachusetts and the National Association of Medicaid Fraud Control Units, with representatives of the Massachusetts, Ohio, Vermont, New Mexico and New York attorney generals’ offices representing the states in the negotiations.

Harry Pierre
(617) 727-2543

Posted: July 2008